Close your eyes and imagine a really bad trading session. You might have a recent example you can use. Or if not, just make one up.
The details don't matter. They'll vary for each of us. Just make it bad.
"I drag myself into the office and throw my bag on the floor. Feeling crap with a hangover and too little sleep due to last night's celebrations. It's 10 minutes till market open. No problems. I'll catch up on the pre-session admin later and just wing it. I'm on my third coffee already – this should help me make it through ok."
The market opens and drives higher with strength. "Suckers… it's right into resistance. I'll short here and catch the move back down to the market open."
Of course, it loses!
As does the second attempt. And the third. And the fourth, which had the stop pulled even higher, because "this damn thing is so overbought".
Or maybe your example is something much worse.
Whatever it is, close your eyes and visualise it. And feel every feeling that such a session would bring.
Disgust! Anger! Frustration!
Now, the session is over. You've smashed your keyboard and it's time for review. Close your eyes and imagine yourself critiquing your performance.
Close your eyes, visualise this scenario. And then critique your performance.
Now let's shift the scenario slightly.
This time the session went exactly the same, but you weren't the trader. The trader was the person you most love in life. Your partner. Your Mum. Whoever you care the most for.
And you're their coach. The person they come to after each session to discuss their performance and to plan the way forward.
Close your eyes and imagine how you would handle their performance review.
If you've been honest with yourself, it's likely that the first scenario would have been far more emotional. Quite likely an explosive, self-critical and self-deprecating review.
Whereas the second, while still noting that the performance was unacceptable and must lead to change, would likely be more calm and rational. With a more considered review of both the reasons for the poor performance and the solution that is necessary to prevent recurrence.
This simple shift in the scenario has created some space, or distance, between our rational mind and the emotion associated with the trade performance.
I absolutely love this article by Brad Stulberg in NYMag.com:
Please read it. It will take about 10 minutes, tops.
Some key excerpts:
- Collectively referred to as “self-distancing,” practices like those outlined above and Rusch’s “pretend you’re talking to a friend” allow us to remove our emotional selves from intense situations, paving the way for more thoughtful insight and subsequent decision-making.
- Employing a self-distancing strategy allows you to evaluate activities or situations that are rife with passion from an entirely different perspective, one that includes logic alongside emotion.
- “I talk to myself all the time,” says Rusch. “It’s just that when I talk to myself as myself, I tend to be negative and not so helpful. But when I talk to myself as if I were talking to a friend, my words are motivating, forgiving, and far more productive.”
Employing Self-Distancing Strategies to Improve Journaling and Review
I will be employing these ideas in two ways:
Here's another excerpt from the article:
- Similar studies show that when individuals think, or journal, in the third person rather than in first person — for example, “John is running into challenges with his business that seem insurmountable” versus “I am running into challenges with my business that seem insurmountable” —they, too, evaluate themselves and their situations more clearly and with more wisdom.
I now journal in the third person.
Give it a try for a month. You can always go back to normal if you don't like it.
All reviews (session reviews and longer term reviews) will now be conducted as if I am the "Performance Coach" reviewing a trader within my firm.
Again, give it a try for a month. You've got nothing to lose.
And if you can separate your rational and logical side from the emotion of the session, just a little, there is a WHOLE LOT to potentially gain.
Why Not Get Started Right Now?
That trading you did so far this year is no longer yours. It was done by your best friend, your partner, or some other loved one.
You are now the performance coach.
And it's time for you to honestly review their trading business.
Close your eyes and imagine the review session. And answer the following questions.
- Did they approach these recent months with clear and realistic goals for growth and development?
- Did their performance drive them successfully towards achievement of their goals?
- Are the goals still appropriate, or do they need amending?
- What action must be taken in the coming months to take decisive steps forward?
Calmer. More rational. More logical.
And far more likely to lead to practical and effective decision making.
Give it a try!